ACCORDING to reports, the Central Bank of Cyprus has warned banks to change their attitude towards borrowers and avoid foreclosing on their primary residences in cases where they are unable to maintain their mortgage repayments.

The Central Bank has also called on banks to help borrowers rework their mortgages and even went as far as giving notice that there could be a haircut on non-performing loans in efforts to facilitate their repayment.

A special team of Central Bank officials has been set up to check the practice of the Bank of Cyprus before carrying out similar checks at other lenders.

A source at the Central Bank said that the thirty largest borrowers have bank debts totalling €6 billion and that priority will be given to the seizure and sale of their property.

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You have it spot on Steve! We bought and paid for our property in 2005 and decided to sell for family reasons. It cost us Ã¢â€šÂ¬25k to enable us to work through the quagmire which entailed paying the developers accountant to enable a tax clearance certificate to be issued: clearing a large portion of developers tax debt: paying over a bank waiver to remove encumbrances on the property: paying a lawyer to negotiate with the (Laiki) bank: plus all the normal cost associated with a sale ie estate agents, land registry, immovable property tax.

We feel somewhat lucky to have extricated ourselves but it has been at some cost financially, emotionally and to some extent short term health.

Bill & Anne (Bond) PS Nigel’s help was invaluable during this journey – thanks again Nigel.

So the Central Bank says that priority will be given to siezure and sale of the assets of the top thirty delinquent borrowers. Most of them will be property developers. At the same time they issue a stern warning to banks not to go after borrowers who can’t maintain their repayments, which I guess refers to individual buyers and not to developers. This does not make sense unless they are banking on (ho ho!) buyers to repay the debts of developers.

Conspiracy theory number 1 goes like this……

The authorities are delaying the issue of title deeds to buyers who have signed contracts with developers who owe large amounts to the banks, so that when the developers loans are called in, there will be an army of buyers who can be tapped to pay the loans back in order to obtain their title deeds.

Notwithstanding the final two lines of this piece, development companies which are deemed “too big to fail” will receive preferential treatment at the expense of the rest of humanity. Watch this space.

Martyn, sadly I fear you are not wrong. Throughout the developed EU it is the easy target who always funds the excesses or financial default of the rest. None more so than in the UK where it is prevalent in all aspects of financial life.

The Banks will never lose and will continue to make unprecedented profits on the back of the consumer no matter what the consequences to the social fabric of society. Likewise energy suppliers and in the not too distant future potable water suppliers will do the same. All justified by the term supply and demand.

Cyprus is no different it is only the rhetoric which is perhaps not as well honed, disguised and articulate as that from their North European partners. I often smile at the indignation expressed by some in having to pay off someone else’s debt in order to proceed, similar but not exactly the same as a joint loan or mortgage where one party decides not to pay their half. They are equally and severally liable so the remaining party has to pay on behalf of both or risk repossession. It is standard practice unfortunately.

Just what is needed to gain savers confidence in the Cypriot banking system. Who would keep their savings in such banks? Many borrowers will just stop paying their mortgages, knowing that the banks can do little to them.

A thought! I wonder if there is such a law or custom & practice in Cyprus regarding whats known in the UK as Squatters Rights? If a person can prove they have been living in a property for a number of years and have actually purchased the property can they claim the right to live in it. Again, just a thought.

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